Question

texas inc. has 10,000 shares of 6%, $125 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at december 31. what is the annual dividend on the preferred stock?.

Answer 1

The annual dividend on Texas Inc.'s preferred stock is $75,000, calculated using a 6% dividend rate on the $125 par value shares, with 10,000 shares outstanding.

Step-by-step explanation:

The annual dividend on Texas Inc.'s preferred stock can be calculated by multiplying the dividend rate by the par value of each share and then by the total number of preferred shares outstanding.

With a 6% dividend rate, a $125 par value, and 10,000 shares outstanding, the annual dividend on the preferred stock is calculated as follows: 0.06 (dividend rate) × $125 (par value) × 10,000 (number of shares) = $75,000.